The Mining and Energy Commission’s Environmental Standards Committee meets again next Thursday and returns to discussion of draft rules on disclosure of fracking chemicals. As discussed here, the draft rule presented in January did not require disclosure of trade secret information to state regulators except in response to a spill or other environmental harm. Comments in committee suggested that the proposal to allow drilling operators to withhold trade secret information from regulators (at least until there is actual environmental damage) arose out of concern that the MEC does not have authority to prevent public disclosure of trade secrets.
Confidentiality provisions in the N.C. Public Records Act should address that concern. The Public Records Act broadly requires state agencies to allow public access to information received in carrying out the public’s business. But one section of the Public Records Act creates exceptions to the general rule; G.S. 132-1.2 requires state agencies to keep confidential certain types of information including trade secrets, bank account information, and personal identifying data. The section of the law concerning trade secrets appears below:
§ 132‑1.2. Confidential information.
Nothing in this Chapter shall be construed to require or authorize a public agency or its subdivision to disclose any information that:
(1) Meets all of the following conditions:
a. Constitutes a “trade secret” as defined in G.S. 66‑152(3).
b. Is the property of a private “person” as defined in G.S. 66‑152(2).
c. Is disclosed or furnished to the public agency in connection with the owner’s performance of a public contract or in connection with a bid, application, proposal, industrial development project, or in compliance with laws, regulations, rules, or ordinances of the United States, the State, or political subdivisions of the State.
d. Is designated or indicated as “confidential” or as a “trade secret” at the time of its initial disclosure to the public agency.
There are two important things about G.S. 132-1.2 :
— The law applies to all state agencies; it is not necessary for each state board, commission or department to have individual authority to keep information protected by the statute confidential. In fact, many (if not most ) state agencies operate under statutes that do not address these confidentiality requirements at all. State agencies simply apply the criteria in G.S. 132-1.2 to identify information that must be kept confidential and withhold the information from disclosure.
— The law specifically says that the Public Records Act not only does not require release of trade secret information, it does not authorize its release by any state agency.
A 1999 North Carolina Court of Appeals decision interpreting G.S. 132-1.2, concluded that the law requires state agencies to keep information meeting the “trade secret” definition confidential unless the General Assembly has created a specific exception allowing its disclosure. In MCI v. N.C. Utilities Commission, telecommunications companies challenged a decision by the state Utilities Commission to release data that the industry considered to be trade secret information. The N.C. Court of Appeals agreed that the data met the definition of a “trade secret” and ruled that the Utilities Commission did not have authority to disclose the data because the General Assembly had not created an exception to G.S. 132-1.2 allowing its disclosure.
In short, state agencies do not need individual authority to comply with the confidentiality requirements of G.S. 132-1.2. Instead, agencies need specific authority to disclose information that the statute makes confidential. As a result, G.S. 132-1.2 gives DENR and the MIning and Energy Commission all of the authority needed to keep trade secret information confidential. It seems that North Carolina could require disclosure of trade secret information to regulators with the assurance that the state Public Records Act would protect that information from public disclosure.
Note: There are a few state laws that affect how G.S. 132-1.2 applies to individual agencies. For example, the Environmental Management Commission operates under a law, G.S. 143-215.3, that both creates exceptions to the confidentiality requirements of G.S. 132-1.2 and provides a specific process for resolving conflicts over disclosure. G.S. 143-215.3(b) allows the EMC to disclose air emissions data and effluent data even if the data meets the definition of a trade secret under the Public Records Act — because federal law requires public disclosure of that information. The statute also allows the EMC to disclose trade secret information to other state and federal agencies if necessary to carry out the EMC’s responsibilities. G.S. 143-215.3(d) creates a process for resolving disputes about disclosure of information by declaratory ruling. The statute wasn’t needed, however, to give the EMC and DENR authority to comply with the basic confidentiality requirements of G.S. 132-1.2.